Walgreen Co. announced today that it will remain based in the U.S. after buying the remainder of pharmaceutical giant Alliance Boots GmbH, acknowledging that it was aware of public opinion about moving its headquarters overseas.

The combined company will remain based in the Chicago area, Walgreen said, and current CEO Greg Wasson will remain CEO of the combined company.

Alliance Boots Executive Chairman Stefano Pessina will be executive vice chairman of the new company and will oversee handle strategy and M&A and report to Mr. Wasson, Walgreen said.

Walgreen shares tumbled sharply this morning after the company announced its plans and lowered its 2016 earnings goal for the combined company.

In a statement, Gov. Pat Quinn lauded the company "for their decision to stay and continue growing in the United States of America, right here in Illinois."

"Walgreens' decision is the right one for the company, our state and our nation,“ he said in the statement.

Walgreen, the country's largest drugstore chain, had publicly acknowledged the possibility of moving its headquarters to Europe in April. It bought a 45 percent stake in Switzerland-based Alliance Boots GmbH in 2012.

In making the headquarters decision, Mr. Wasson said in the statement:

“In line with our fiduciary duty to the company and our shareholders, we undertook an extensive and rigorous analysis with a team of leading experts to determine the most optimal — and sustainable — course of action. We took into account all factors, including that we could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny. As a result the company concluded it was not in the best long-term interest of our shareholders to attempt to redomicile outside the U.S."

The company also said:

"As part of this process, the company considered a wide range of issues, including the potential financial benefits (and their sustainability) and the technical viability of a restructured inversion transaction under current U.S. law. The company also was mindful of the ongoing public reaction to a potential inversion and Walgreen's unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs."

Walgreen gets 35 to 40 percent of its revenue from Medicaid and Medicare, according to analysts.

The new holding company is to be named Walgreens Boots Alliance Inc. and is to be based "in the Chicago area," Walgreen said in a statement. Walgreen's operations will remain based in north suburban Deerfield, with Boots operations based in its current location in the U.K., the statement said.

The combined company's corporate tax rate will be in the high 20s.

Corporate tax inversions have raised the ire of both Sen. Dick Durbin and President Barack Obama and prompted calls for boycotts. Walgreen came under political pressure not to do a so-called tax inversion as other health companies, including drugmakers AbbVie Inc. and Pfizer Inc., struck or attempted deals to cut their own rates and leave the U.S.

There have been 47 U.S. companies that have put together inversions through tie-ups with foreign businesses over the past decade, according to the Congressional Research Service.

“A potential tax inversion has become a hot-button topic in recent weeks as the company and a handful of outspoken investors have weighed the option,” Ross Muken, an analyst with ISI Group LLC, said in a note to clients before the deal was announced. Moving overseas could have saved Walgreen at least $4 billion in taxes over five years, he said.

On a conference call this morning, Mr. Wasson issued new 2016 revenue goals for the combined company of between $126 billion and $130 billion. The company had previously withdrawn its initial financial guidance, of $130 billion, for the combined company.

With increased pressure on pharmacy margins, he said the company would slash the combined company's costs by $1 billion at the store, distribution and corporate levels, over three years beginning in 2015.

The company also said it expects adjusted earnings of between $4.25 and $4.60 per share from the combined operation by 2016. That translates at the midpoint of the range into about $7.2 billion in adjusted earnings, which is lower than a previous range of $9 billion to $9.5 billion the company had forecast.

Walgreen also announced a plan to buy back as much as $3 billion in stock and a quarterly dividend of 33.75 cents a share.

Walgreen said it is to pay about $5.29 billion (at a current exchange rate of $1.69 per British pound) and about 144.3 million shares of Walgreen stock, worth some $10 billion, for the remaining 55 percent of Alliance Boots.